Feb. 13 (Bloomberg) -- Italian borrowing costs dropped to a
record low at a sale of three-year debt today as investors shrug
off rising tensions between Premier Enrico Letta and his party
chief Matteo Renzi that could cause the collapse of the
government.

Italy sold a total 7.5 billion euros ($10.3 billion),
matching the maximum target for the sale. The country sold 3.5
billion euros of a three-year note maturing in December 2016 at
a record low 1.41 percent compared with 1.51 percent Jan. 13.

Investors bid for 1.43 percent the amount of the 2016 debt
sold, up from 1.38 at the previous sale.

’’Markets are likely to react positively to Renzi becoming
premier, believing that the pro-reform and straight-talking
politician will re-ignite reforms,’’ Wolfango Piccoli, managing
director with Teneo Intelligence in London, said in a note
before the sale. ’’However, his lack of a popular mandate could
complicate his ability to enact reforms.’’

Yesterday Letta, who is under pressure to resign and pave
the way for a government led by Renzi, proposed a new policy
agenda including tax cuts and an overhaul of the country’s labor
market, in a bid to bring his fraying coalition back together.
Renzi will clarify his plans at a party meeting scheduled to
start at 3:00 p.m. local time in Rome.

At today’s auction the Rome-based Treasury also sold 2.5
billion euros of 2021 notes at 3.02 percent, compared with 3.17
percent Jan. 13. In addition, Italy sold 1.5 billion euros of a
2044 bond to yield 4.59 percent, compared with 4.99 percent when
it last sold the debt Nov. 13.

Investors bid for 1.37 times the amount of the 2021 debt
sold and that of the 2044 bonds, compared with 1.38 and 1.46 at
the previous sales respectively.